Is it possible to save too much for retirement? The answer may surprise you. Yes, you can save too much for retirement. You might ask, how can that be? How can anyone have too much money? It’s not a matter of having too much money, it’s a matter of proper retirement planning.

What would you think of someone who lived their entire life like a pauper and then retired with more money than they could possibly spend? It happens all the time. There’s a better way to live your life.

Enjoy your life while you’re still young. Do things with your children for the short time they live under your roof. Go on vacations and have adventures, otherwise the only thing you will have is regrets. There is more to life than working double overtime and saving every penny for retirement.

Wake Up and Smell the Coffee

If you are concerned that you may be saving too much, there is hope. Recognizing that you have a problem is the first step to solving it. First, you need to forget about using rules of thumb to plan your retirement, like the 4 Percent Rule or the 80 20 Rule. A one-size-fits-all rule of thumb is not a good way to plan for retirement. Retirement Rules of Thumb don’t work because everyone’s situation is different.

For example, some people pay off their mortgage by the time they retire while others do not (or are lifelong renters). Some people live in states that tax Social Security benefits and others do not. There are pensions and annuities and reverse mortgages and taxes to consider, just to name a few. There are simply too many variables to rely on a rule of thumb to plan your retirement.

That includes the free online calculators you see everywhere. There’s one on the website where you have your 401(k), and probably one where you bank. “You are not on Track.” Sound familiar? Free online calculators ask for your age and income and maybe how much you have saved for retirement.

Free online retirement calculators are based on rules of thumb. How can you tell? Do they ask for an estimate your living expenses in retirement? Do they ask if you plan to have a part time job or a business after you retire? Computers can’t read minds (at least not yet). If you’re not being asked those types of questions, they’re not being considered.

Retirement Planning Done Right

A better approach is to hire a financial advisor or use sophisticated financial modeling software. You’re going to have to part with some money to do that. It costs about $1,500 to have a financial advisor develop a retirement plan for you. With the other route you can get started for free. To learn more, check out this article entitled Best Retirement Planning Software.

When it comes to retirement and generalizations, one thing is true: your Living Expenses in Retirement will likely be less than what they were when you were working. For one thing, you won’t be saving for retirement anymore. In addition, you will no longer be commuting, your taxes might be less, you’ll probably eat lunch out less often, and you might be Downsizing to One Car in Retirement.

To summarize, don’t save too much or too little for retirement. Don’t rely on retirement rules of thumb or free online retirement calculators. Whatever you do, keep saving and planning for retirement.

Photo credit: Pixabay The Eggstack Blog will never post an article influenced by an outside company or advertiser. Our mission is to help you overcome uncertainty about retirement planning and inspire confidence in your financial future.